Alcanna looks to a future that profits from alcohol and cannabis

Edmonton-based retailer seeks to expand booze sales elsewhere in the country and ultimately expects pot will bring a big payoff

Tim le RicheA cannabis supply shortage persists for retailers and savvy customers are snapping up what little is available, Alcanna‘s CEO says.

James Burns pointed to the company’s flagship Nova Cannabis store near Whyte Avenue in Edmonton.

“We get product delivered once a week on a Thursday and the customers know that’s the day,” Burns said in a conference call. “The bulk of the product that they want is gone that afternoon … and then we have nothing for six days.”

Burns thinks it’s going to be some time before the supply squeeze gets sorted out.

Edmonton-based Alcanna – formerly Liquor Stores North America – operates 236 liquor outlets in Alberta, B.C. and Alaska, and five cannabis stores in Alberta.

Late last week, the company reported 2018 total liquor sales of $650.9 million, compared to $637.6 million the previous year. Alcanna’s Dec. 31 year-end was only a few months after cannabis legalization, but total sales for that business were $7.9 million. Although Alcanna had a net loss on the year, it said fourth-quarter same-store sales in Canada increased 7.4 per cent and six per cent in Alaska, marking the best quarterly same-store sales growth in six years.

James Burns
James Burns

Alcanna has 31 liquor outlets in B.C. That province allow limited private retailing, as opposed to Alberta, which has fully deregulated alcohol stores. The company has its eye on Ontario, where the government is looking at alcohol marketing changes.

“We don’t know what those changes will be, whether it will be like the Alberta model … and something we can invest in,” Burns later told Edmonton’s Business. “If Ontario opens up, you know, that’s 14 million people, the opportunity would dwarf our Alberta operations.”

However, Burns thinks the cannabis side of the business also has huge potential and may some day, years down the road, rival the alcohol business in size.

“The cannabis business hasn’t really started,” he said. “We’ll see in three years or so, when it’s starting to mature, when all products are legal … and not only legal but available in quantities that are reliable and predictable.”

In addition, alcohol sales overall are trending downward, he noted.

“Millennials just don’t drink as much, or drink in a different way,” said Burns. “Demographics of the population are changing – many people coming into the province are from cultures that don’t drink as much. It’s not collapsing but it’s not growing, and cannabis could very well, over time, equal it or surpass it. I don’t think it will happen soon, but I can see it happening eventually.”

Alcanna’s shares (TMX: CLIQ) closed at $5.22 on Monday compared to a 52-week high of $11.56.

Burns says the company is on the right track to cope with a changing industry.

“This is something that’s going to be a two-or-three-year process to turn a very strong balance sheet into a very strong income statement,” he said. “We’re making investments to do that. We’re confident that we’re on track.”

Alcanna’s liquor store brands include Wine and Beyond and Liquor Depot. And it recently completed a transaction bringing Ace Liquor into the fold.

(Disclosure: The writer holds a small number of Alcanna shares.)

Tim le Riche is a Troy Media business reporter based in Edmonton. He writes for Edmonton’s Business.


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